Caution urged for first-time buyers

First-time buyer website Firstrung has said that prospective buyers are now facing the most uncertain period in the housing market for four years, and has urged them not to get carried away in the face of falling prices.

The firm has noted that it would still take a huge correction for prices to return to levels of affordability seen in 2004, adding that "the majority of first-time buyers" would remain priced out even if there was a one per cent fall every month last year.

The comments come soon after the Council of Mortgage Lenders (CML) revealed that the typical new buyer now spends more than 20 per cent of their monthly income on mortgage payments.

"There is a paradox with this that will harm first time buyers, which the mainstream media have missed out on," said Paul Holmes, Firstrung CEO.

"The underwriting criteria [are] going to become very harsh, so while first time buyers will benefit from house prices falling, 40 per cent of mortgage products being out of the market is going to harm them.

"There will still be around 1500 mortgages out there but at one point there were 3500-4000 mortgages available," Mr Holmes concluded.

Finance your build or renovation with one of BuildStore's unique finance packages



© Adfero Ltd